Is it possible to show income from Cryptocurrency in ITR?
In India the cryptocurrency sector is in a very nascent stage Many investors does not know if the crypto trading is legal or not and secondly, will the trading will bring potential risk to their investment ? many things come to the investors mind.
With the Bitcoin is shining and breaches 35,000 USD, many are thinking their extra savings to invest in the cryptocurrencies. At the same time, there is confusion among many on how the earnings from investments in cryptocurrencies should be disclosed in the ITR as there is no clarity on it
As per the provisions of the Income Tax Act, an assessee - having annual income of more than Rs 2.5 lakh or who has received any payment on which tax was deducted at source (TDS) - needs to file Income Tax Return (ITR), disclosing all the earnings.
Cryptocurrency earnings ought to be taxed as a short or long-term capital gain based on the duration they were held as an investment. In fact, the Reserve Bank of India (RBI) had banned holding or trading cryptocurrencies in India. The RBI ruling, however, was set aside last year by the Supreme Court, paving way for investments in cryptocurrencies in India.
An expert says, Currently in India, crypto currencies are not recognised by RBI as a currency and similarly income tax law also does not define it as a currency. So, crypto currencies cannot be regarded as currency neither an India currency nor foreign currency. Therefore, for the purpose of income tax it will be regarded as property and tax implication will be similar if one is holding any other property. In other words the profit or gains arising from crypto currencies either can be taxed as business profit if the same is acquired with the intention to make profit by trading/mining or capital gain if the same is acquired with the intention to create wealth.
However, the amount of earnings generated by investing in cryptocurrencies may be highlighted under ‘Income from other sources.
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